Community bank Web sites offer personal touch

Fifth annual review of Ninth District bank Web sites

The findings of the fifth annual review of Ninth District bank Web sites
reveal for the first time that the number of banks with a Web site is
greater than the number of banks without. In addition, the percentage
of banks offering sophisticated online services to their customers increased.

Customers' privacy also continues to be a major concern, as most banks
make a point of offering easy access to their privacy policies. Banks
are also looking for money-saving efficiencies, such as avoiding the listing
of current interest rates, which need frequent updating, and replacing
personal e-mail addresses with standard information request forms.

As of the first quarter 2003, 56 percent of Ninth District banks had a
public Web site, double the 25 percent in last year's survey. Of the 392
Web sites reviewed in 2003, 74 percent have sophisticated online transaction
capabilities compared with only 68 percent of the Web sites reviewed last
year.

Not only do distinctions exist between the 2003 and 2002 reviews, differences
were also noted between large banks and community banks. As one might
expect, large banks provide more robust services on their sites, while
community banks offer more personal service. On average, large banks are
more likely than community banks to present transaction capabilities and
offer online loan and/or certificate of deposit applications, insurance
services and job postings. And while many community banks are following
the lead of their larger counterparts, on the whole, community banks are
more likely than large banks to offer their customers information on current
interest rates, the ability to e-mail bank staff directly and links to
community sites.

Meanwhile, the bank Web site design industry consolidated somewhat. Forty
Web design firms provided development services for 90 of the reviewed
sites. The most often used Web design firm developed 20 percent of the
bank sites. However, most banks (77 percent of the total reviewed) used
in-house resources to design and develop their Web sites.

Minneapolis Fed interns Naomi Cytron and Erko Abdullahi contributed
research to this article.

Review Methodology

Banks are required to report the Web address of their main banking
page on the quarterly call reports (regulatory reports required
by the Minneapolis Fed). In the first quarter 2003, 505 banks reported
Web addresses, of which 392 sites were reviewed; 71 represented
the same site for multiple branches; and 42 sites were either under
construction or not available, as some banks reported an e-mail
address as the Web address. Seventeen large banks (more than $500
million in assets) and 375 community banks ($500 million or less
in assets) were reviewed.